Contents

The refinery will be built on a 29 square kilometres (11 sq mi) piece of land in Kabaale Township, Buseruka Sub-county, Hoima District, Western Region, near the international border with the Democratic Republic of the Congo, along the eastern shores of Lake Albert.[3] This will be close to Uganda's largest oil fields in the Kaiso-Tonya area, approximately 60 kilometres (37 mi), by road, west of Hoima, the location of the district headquarters.[4] Tonya is approximately 260 kilometres (160 mi), by road, north-west of Kampala, Uganda's capital and largest city.[5]

Some of the largest oil fields are in the Kaiso-Tonya area in Hoima District. This area has been selected for Uganda's only oil refinery.[8] The strategy is to build a refinery that meets the petroleum products needs of Uganda and its regional neighbors, with any remaining to be exported.[9][10]

In addition to the refinery, a new airport[11] and a hospital[12] are planned. The Hoima–Kaiso–Tonya Road, which connects Hoima to Kaiso and Tonya along the eastern shores of Lake Albert, passes through Kabaale Village where the refinery will be located.[13] Also planned is the Nzizi Power Station, a 100 megawatt thermal power plant, using natural gas and heavy fuel oil as raw material.[14] The cost of the refinery is estimated to be US$4.3 billion, with 70 percent of that amount to be borrowed and the remaining 30 percent coming from shareholders.[15]

Two intake pipelines and one distribution pipeline, with a total construction bill of over US$200 million, are planned to bring crude to the refinery and distribute the finished products to a new terminal in Buloba on the western outskirts of Kampala.[16] The government hired the Ramboll Group A/S, a Danish company, in July 2015 to conduct an "'early phase' detailed route and environmental study for an oil pipeline that will run from the Albertine Graben - Hoima to Buloba...."[17]

The government of Uganda has, from the beginning, preferred a small production capacity to prolong the longevity of its new oil discoveries.[18] This preference initially pitted it against the three major exploration companies in the country, which preferred rapid harvesting and export of the crude via pipeline to the Kenyan coast.[19]

In March 2013, the government of Uganda engaged the US-based energy investment and consulting firm Taylor Dejongh to carry out an international search for a strategic investor in the refinery.[20]

In October 2013, the government of Uganda invited interested parties to bid for the construction, operation, and 60 percent ownership of the refinery in a public-private partnership arrangement.[21][22]

In January 2014, the Ugandan government shortlisted the following six consortia out of fifteen applicants for possible selection as strategic investor in the refinery: China Petroleum Pipeline Bureau (from the People's Republic of China), Marubeni Corporation (Japan), Petrofac (United Arab Emirates), RT Global Resources (Russia), SK Energy (South Korea), and Vitol (the Netherlands).[23]

In June 2014, media reports indicated that four of the six companies had submitted detailed proposals for the construction of the refinery.[24] At that time, the firms still left in the bidding were China Petroleum Pipeline Bureau, Marubeni Corporation, RT Global Resources, and SK Energy.[25][26]

On 25 June 2014, it was reported that consortia led by RT Global Resources and SK Energy had emerged as the two best contenders. They were requested to make a last and final proposal so that the winner could be selected by the end of August 2014.[27]

In late 2016, negotiations with the consortium led by SK Engineering & Construction also broke down.[36] Negotiations were then started with a new consortium led by Guangzhou Dongsong Energy Group, a Chinese company. Others in that consortium included (a) China Petroleum Engineering & Construction Corporation (CPECC) (b) China Africa Fund for Industrial Cooperation (CAFIC) (c) Guangzhou Silk Road (d) East China Design and Engineering Institute (e) Exim Bank of China and (f) Industrial and Commercial Bank of China (ICBC). Those talks collapsed in June 2017 when CPECC, the main contractor in the consortium, pulled out of the talks.[37]

In August 2017, a new consortium led by General Electric of the United States and JK Minerals South Africa agreed to build the US$4 Billion refinery and to own 50 percent and JK Minerals Africa to own 10 percent, while the government of Uganda and other investors take up the remaining 40 percent. Other members in this new consortium are (i) Yaatra Ventures LLC, (ii) Intracontinent Asset Holdings and (iii) Saipem SpA of Italy.[38] These firms were competitors during the initial bidding. However, they came together and formed a special purpose vehicle, the Albertine Graben Refinery Consortium (AGRC), which is expected to design, procure the necessary supplies and build the refinery.[36][39][40]

General Electric is expected to take up 50 percent and JK Minerals Africa to own 10 percent. The government of Uganda has proposed that the remaining 40 percent be divided among itself, Burundi, Kenya, Rwanda, and Tanzania in equal shares,[15] except that Uganda would assume whatever ownership interests are not subscribed by the other countries.[15][41]

Kenya has agreed to purchase a 2.5 percent interest in the refinery for an estimated KES:5.6 billion.[42][43] It has not decided whether to increase that interest to the maximum of 8.0 percent, saying that it needs to further evaluate the project's commercial value in light of the government's budgetary constraints.[15]

Burundi and Rwanda have submitted letters of interest to Uganda.[44] Burundi has not decided the extent of its ownership interest, waiting on the feasibility study of the refinery and a detailed statement of anticipated costs.[44]

Tanzania has committed to pay US$150.4 million for 8 percent ownership in the refinery.[45][46]

In October 2016, it was reported that Total SA of France had committed to acquiring 10 percent shareholding in the refinery.[47][48]

On 10 April 2018, the Albertine Graben Refinery and Jk Minerals Africa (South Africa) Consortium signed a definitive agreement with the government of Uganda, committing to design, develop, finance, construct, operate and maintain the planned 60,000-barrel-per-day Uganda Oil Refinery in Hoima District, in the Western Region of Uganda.[50] The signing of this Project Framework Agreement, allows for the commencement of the Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimation (PCE) and Environmental & Social Impact Assessments (ESIA).[51]

In August 2018, the Albertine Graben Refinery Consortium (AGRC), selected Saipem SpA of Italy and a member of AGRC to commence with the FEED study, at a contract price of US$68 million. The study is expected to last 17 months, to be followed by the Engineering, Procurement, and Construction (EPC) phase.[52][53]